Quote:
Originally Posted by Scudz
Am I one of the few that avoid value trading? I never did do well with it since no one seems to have a 'right' answer. I've gone to school for Finance. I've looked at balance sheets, cash flow statements, etc. I've taken accounting courses and read books and books on value investing. However, in the end, I still lack the tools to do well in value investing. Namely, I know shit about running a company, let alone trying to compete against Wallstreet's best and brightest with access to more tools than a simple Yahoo Finance researching will do.
So I looked to day trading and never looked back!
Now, I spend no more than 5 mins before deciding whether to enter a trade or not. Usually a lot less as I only keep track of only 4-5 possible trades. (For those who'd like to know, they're the Forex pairs GBP/USD, GBP/JPY, EUR/USD, EUR/JPY, CAD/JPY)
Because these pairs are active pretty much 24/7, I look to trading higher timeframes. What I mean is that I open up a chart, identify support and resistance levels and look where the price is currently at. Timeframes in the 1hr, 4hr and daily provide me with almost all the information I need.
The last part is certain japanese candle formations at certain areas. Namely S/R areas and 50&00 psychological areas. I do away with all the fancy indicators (including any oscillators, trend lines and volume analysis. Though granted, volume analysis is very useful to a centralized market, but Forex markets has no such thing).
I usually go through each pair in less than 30 seconds and know what I'd like to see and what I expect. If I see a possible trade, I will wait and see what the price does. If it meets my criteria, I calculate my risk (usually at 2% or less) and enter in the trade with a take profit in mind.
I definitely like swing trading A LOT more than value trading. Why? Saves time, allows me to understand why the markets move the way it moves during smaller intervals and affords me time to do other things.
PS. Did anyone notice that when the USD/CAD broke the psychological support barrier of the 1.0230 and dipped very close to par? It tried 2 other previous times to break it but failed. Before back in Jan 2008, it had trouble break the SAME area but back then, it was a resistant ceiling at the time. Keep an eye around this area still. As of 12:43pm GMT (3:43AM PDT), it's above the resistance but hasn't closed yet. I suspect it'll start going down and bounce around this area and hit the $0.97CDN/1USD pretty soon.
|
As you know Scudz, I spent over 2 years with excellent results ignoring just about everything every book says. While this works well for short term trades based on the psychological element of the market, I don't know if I would have the same advice for someone looking for investment advice.
It really comes down to your time horizon and your temperament. The things you're talking about are pivots, market movement based on volume specifics, and trends. While I'm the first to agree these are essential in timing markets, it depends on how long you plan on being in the market itself (time horizon).
Plus there is a greater level of risk. Not everyone wants to spend the time we've spent learning the ropes before jumping in. In fact, I would say there is probably one in ten thousand that spend as much time as we do to learn the markets. It's a life long journey with lots of ups and downs and it's not for everyone.
I hate to use poker as an example but how many people are pro poker players that survive?